Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to the Antero Resources Fourth Quarter 2022 Earnings Call. At this time all participants are listen-only mode. [Operator Instructions].

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Brendan Krueger, Vice President of Finance for Antero Resources. you. Thank

begin. may You

Brendan Krueger

we'll you conference us few call. financial and through Thank for quarter minutes Antero's XXXX the then highlights, operating investor We'll and it for morning. up for Q&A. joining fourth going open Good spend a

also presentation you to like reviewed today's that website will of the a provided direct we call. where be www.anteroresources.com, have to separate would homepage our I at earnings call during

for to may disclosures contain financial our certain measures, earnings reconciliations regarding important refer including comparable release call such Today's GAAP most measures. press non-GAAP the Please measures. to financial

on Paul Marketing Natural and Transportation. President; Senior and call Senior Transportation; me Joining Dave President Gas Marketing Vice the Fowler, today of and Rady, Chairman, Cannelongo, President CFO; Kennedy, are and CEO Liquids of Justin Michael Vice

turn to I Paul. call will over now the

Paul Rady

by I'd Thank that underwent during you, Brendan. to Antero like the transformation XXXX. significant highlighting start

start Let's delivered the and we repeatable X, that results year. summarizes with Slide the consistent throughout which

The focus top of the reduction. continued debt on slide illustrates our

XXXX, of our total During billion. beginning quarter program over the in now debt Since reduction of by debt $X fourth billion. reduced we $X.X by we debt the have approximately our XXXX, reduced

were Because towards to of approach reduction, to our debt allocation this our shift capital increasing we to conservative returns cash able shareholders.

see XX can the million you the on slide, shares over the outstanding. As shares, bottom of we purchased of total representing X%

and Slide Antero's business let's land model, consistent on repeatable Organic titled X on To Land acquisition expand strategy discuss our Acquisitions. and

M&A the commodity increase both prices Over in public and we years, as private corporate last few an witnessed increased.

emphasis on acreage on acquisitions. lease a focused with core particular remained Antero our Meanwhile, organic footprint

has within focused absolute dilute position can Appalachia. our on debt, that organically transactions our equity our larger acreage to and opposed in core acquiring add been strategy As

proven dollar has cost commodity our and us allowed to acquire results. acreage near average well cycles This across

an that During our per cost added to XX location, capital than plan average less wells locations organic average offsetting more leasing approximately year. maintenance million of an Antero's $X of program assumes XX drilling at XX than per XXXX,

strategy. The absolute since Now number let's turn the our Slide XXXX to at reduction our churn discuss Antero's compared peers. to top differentiated highlights X to debt

of debt peers that their primarily result versus corporate as of have reduction prioritizing differentiates M&A. corporate a disciplined levels, debt Our strategy absolute increased Antero

debt achieved, positioned maintain in especially of and a we already forward. recent initial gas important, our With is target the well return debt to reduction program natural capital fallback are balanced of prices. in This going light

increasing the the our out the We to page of The back significant $X.XX gas our premiums of Appalachian percentage of NYMEX. times outside exposure sold of particularly The as at where at where basin. storage illustrates levels mechanism of we are force is chart including natural price local risk of gas levels XX% peers Basin, majority the only in low NYMEX. in that to trade of capture have XXX% a markets These the natural to fairway, into as middle the markets shut-ins. sell LNG

The uplift operating and mix our nearly production. predictability received results our through combined stability better coming The highlights we bottom at with of and our diversified the page commodity in chart with from natural the sales, half gas, premium cycles. our from different financial liquid of revenue priced product provides liquids the

comments. our and for on and over touch Transportation; of Senior his Dave I Vice to Cannelongo, will it Marketing fundamentals, to Now the turn current President liquids NGL Liquids

David Cannelongo

the will demand policy. relaxing COVID-Zero prices, which originally pointing macroeconomic improvement Thanks, for their overall this year. expected is factors taking of be of faster to recent due Main the liquids driver recovery Despite fundamentals place reopening, China's headwinds through than price and Paul. are to

prices, reductions PDH U.S. same forecast time, setting and loom the the potential U.S. with up in capacity in recent oil a to picture XXXX. exports revisions into exiting In this and supply year natural At stronger addition, growth points XXXX. bullish gas in

in per volume VLGC are barrels will expected than on increase met X.X by year. be additional recent XXXX more to X is Propane that export exports fleet in XXXX. propane an year-over-year added million XX% VLGC to U.S. Slide development carriers will shown XX Rebounding. additional a to U.S. be number record Exports high This day The titled this back

Exports trend to LPG res/com Slide demand titled as number to The will exporter increasing continue the United highlights petrochemical met marginal to has U.S. X graph The exports. on Production. been Turning LPG with that is Global expected and left the the and need be NGL States.

expected satisfy the are play position utilization as global supplying to LPG. as producer QX allow rates on Antero's U.S. adequate witnessed but U.S. largest will U.S. on already an export East in propane continue Mariner in call this role exporter. to remain active us elevated pool the to LPG terminals to XXXX anchor

is shows while in right supply flat, the XXXX U.S. on world the rest growth in expected that X% by production increase and chart to relatively The year-over-year the of will be X% XXXX. the NGL

supply be considering forecast especially in However, flux, recent gas associated lower growth prices. natural could the

point factors as end levels of drive during QX the enactment seen be the from markets property recoveries their of demand are XXXX. utilization the expected to in seen build-out pet-chem as to policies. increasing in suppressed economic China Domestic and COVID-Zero and expected early should PDH that

to refinery China LPG increasingly buyers will their have looking for barrels. in yields imports Steadily also declining

per Planned in set PDH capacity online the increased feedstock year. this for is to come as seen uptick these exclusively to were first add of Notably, seen compared build-out to will started facilities propane. others demand barrels delayed the the PDH XXX,XXX slide. into XXXX and relatively demand slow demand some to XXXX that was in next be China through and other in day markets of ramp approximately Turning key

unexpected with starting extended global I'll XXXX stability and end economic and effect that cooling pandemic-related my its on spring recognition remarks with the had some lockdowns, the in growth. inflation headwinds the

hydrocarbons given U.S. shale prospects while growth sustainable and decade unrealistic, beyond, long-term maintain trends and supply in LPG poor for throughout of that appear increasing We depleting underinvestment inventory. from show demand the challenges

it will With I that, to Mike. turn over

Michael Kennedy

Dave. X Slide Absolute titled start Thanks, I'll Reduction. and on Leverage number Debt

is years, to in $X.X financial by over and Antero Following in debt X.X last billion leverage below the strongest just history, down now the times. successful debt total company reduction the several program position

today's free prices, This our debt our to million where absolute fluctuate cash flow, still over expect a leverage under strip as Assuming compares XXXX. to remains of time and generate year-end $XXX of comfortably leverage result levels. we higher one at peers materially

continuously alignment enhance In ways we look optimize to margins. and our debt lower our our for business with strategy,

XXXX quarter million. $XXX for options XXXX, During we an NYMEX of first early gas of approximately our settlement the executed

ago of annum. XX% production gas were at XXXX our These approximately hedges per and several $X.XX put in natural years covered place

In contract approximately annually. transportation addition, local discounted million. to Appalachian completed commitment terminated $XX markets an commitments of this a we to related value also through $XX expense a and as million Termination was contract XXXX by reduces unutilized marketing for firm net to

position gas unhedged This Provide thought required to group Cash the free look natural macro and for some price provides slide Slide in breakeven at around let's on the each XX views settlement, titled Hub the process Flow color cash the Free hedge flow peers NYMEX the an and of additional natural to peer achieve a Henry Breakeven. our number turn XXXX. gas

or capital no believe investor In for with is appetite companies today's available X.X Shale there excess world, flow operate a to we deficit. cash

gas, revenue result higher in and generate uplift most Haynesville estimate natural not a flow are as maintenance able to cash page, liquids this costs, differentials limited on free pricing of environment. capital on widening basis that we companies illustrated today's As

the Permian-associated prices, being Haynesville is this capacity marginal maximum dictated by the important? With oil producing and is Why gas Appalachia natural gas pipelines near now region.

that free is is The this cash at lowest Antero's the natural other group. notable price peer from for flow end breakeven slide takeaway of the gas

by our of base, chart significant as and price on bottom shown left. in gas are chart the the pricing on top the The we to premium low drivers revenue behind liquids this the as breakeven receive natural left the contribution the evidenced

basin's into the gas, of activity. dive story let's on top the and in drilling Haynesville. the The Further Decline gas Expected illustrates Slide chart XX, turn slide the number the prices to macro natural from between The relationship titled Activity on

prices Henry and in $X, NYMEX time rig below every XXXX, Haynesville the fell Since Hub noticeably declined. activity counts

to at the is to environment, $X $X.XX closer While is now likely kept on fair to inflationary $X. today's this level in the we $X line say, have old chart, it

on declined natural now, profile significantly the XX% rigs chart each in the count review last months left through the or highlights the important in to activity average, to as change of rig of decline fall bottom natural expected Haynesville three On The XX the ahead, marginal But the time supplier and gas below Haynesville. the rigs $X. dropped is gas cycles. the

Haynesville of displayed Appalachia. decline on this the higher rates than of that the the right-hand lower chart page, base annual estimated the side As materially are of on

rapid price decline supplier, which downward would the first an response supply this cycle expected following a the suggest this With Haynesville rigs. is being more the marginal in in

execution business of provides through differentiated as In strategy the of excel us year. we NGL closing, a Antero's reopening successful positions cycles. many backdrop propane price prices move through positive across NGL commodity China demand Increasing and to the the to

in gas predict gas pricing wave grows While to LNG as facilities significant XXXX in moderated online. it do the natural prices natural volatility moving materially is second beyond of difficult we expect activity demand export to lead forward, and with coming to

debt plan balance peer-leading and positioned maintenance pay capital to to deliver we shareholders. are while on product well a capital diversification, sheet With down our to return and continuing

now will call the the turn questions. over I to for With that, operator

Operator

question Our to first with Neal Securities. the of Please Truist from proceed your Instructions] question. [Operator comes line Dingmann

Neal Dingmann

really prices well first as my prices I'm D&C on wondering, just commodity Paul, even cost -- degree. question is quite activity to sensitivity. can be volatile as a obviously, just

the cost fluid So, assume, more, your I'm volatility and B? side, I both plan expectation anticipate on you just would how wondering of the given price

Michael Kennedy

of diversification is But the NYMEX And allows this have, unconstrained a the a throwing program level. our really have the nature, maintenance our cash balance first XXXX, Mike, completion sheet. and us hubs for with transport which kind beyond, is two we three-rig the two lowest out free that flow crews. Well, and basin from product to breakeven where of kind Neil, capital, of the and

commodity our and side, low a at we're free flow. generating natural So even today cash $X.X the over maintenance gas on of price billion capital

very unlikely from flow that capital it's from levels So, our reach be maintenance ever cash below where level a we operations. you would would

below crew our any just two we rig realistic So, where don't program. three and would any completion we go commodity development one real price where see scenario

Neal Dingmann

on, is in the here that but last rigs continue you the Paul, that maybe And and the you'll I a drill up then just you you occasionally know Could not two. or just pad even kind maybe long do those to focus of not about they've -- will or couple to Utica cadence past, been or three the ago, in be just occasionally just case go for where specifics may continue talk of months?

Michael Kennedy

generally, Marcellus and It's you little a one bit going Yes. on pad the a breathing of Utica and room have in about though Utica. infrastructure then the focused year XX% we gives as in our know, that in plan REX Marcellus, our capacity forward fills also the just

Neal Dingmann

good. Very Mike. Thanks

Operator

Please Subash Company. Our the next with question proceed from line Benchmark your Chandra question. comes The of

Subhash Chandra

What with the a swaptions morning. guess, guess, Good I and I appetite, commodity think also, capacity spend? this do obviously, some and about but maybe buyback lease share stuff your you of stronger prices, now, given one-off

Michael Kennedy

Yes.

right XX% that capital. cash return billion on flow. over That's we now, of So of have based dedicated free $X.X

free swaption million of and of cash million the of swaps that the flow the on call $XX first the $XXX was transport the termination commitment. then early The

drawings we then $XX So $XXX And that's it. did million facility at have year-end, of credit Subash. million

million. So that's $XXX

above what that's return are are call. on first there capital. So of amounts then that And for the kind the really

have So, the free see be cash depending are, commodity be throughout could to XX%, more the could it prices on XX%. it than flow how occurs generation just We'll at where year.

Subhash Chandra

there. Okay. side, early there's to And termination, even looking terminate possibly or those? was on out still Are I contracts this it. can swaption the you still -- -- think there's you Got an

Michael Kennedy

That We don't contracts. have hedges last the any the was left. of

not therefore aren't Sixth ORRI them may we the on balance the be really our but referring and sheet, our buyer -- those consolidate buyer. You of to override or the VPP from account, Street, what on although a have we VPP they're

Subhash Chandra

was the with I correct. you. You're mistaken VPP. Great. it Thank

Michael Kennedy

Yes. No problem.

Operator

question Our Choudhary of from the Sachs. comes next question. with line Umang your proceed Goldman Please

Umang Choudhary

you thank taking question’s. and morning Good Hi. my for

inventory And as With the your when well. thanks macro. sounds natural year? a wanted propane, pretty this year for sharing that about demand you like also are and on translates how next thinking levels actually rebound then have expecting a markets on on into thoughts your are It propane around to up gas a First, price butane high for and I on the in follow-up you the decent action? markets. follow thoughts I

David Cannelongo

back got What time. Umang. propane so our is prices but Thanks, far about call gallon down about go a last $XX, from we've down $X.XX that oil you've to to seen

well given historical So five-year of environment, in prices were overall, top propane the we especially doing the at quite inventories. are in range really the December, on

move through exports. first U.S. very strong we seen As the quarter, you've

that of to balance expect the the continue We minimum quarter. at a through

So, absolute back days down range, to we five-year of both an supply move that a level on on level.

we we see fall that of the When of lower the an historical returning basis. inventories level year, we balance out obviously to supply absolute the on model five-year days than and as norms on a enter

is far to again, of, here export kind on view summarizes if improve guess, that I first open, high. the look what's quarter, propane will in arbitrage commodities why year. fundamental you at So are pricing so believe just But relative our we the exporting volumes other throughout

thing other are that the from out has summer, international levels freight XX% into to we prices is differential between reduced continue tighten markets. called which expect today, in and will U.S. December that and increase even where Belvieu the about Mont we the capacity, The to we VLGC here which

Umang Choudhary

Will if in seeing like helpful. really Would premium with activity, natural took follow pricing? expecting which recently. to out? you Haynesville? guess see the trade some $X.XX $X.XX pricing it down a you return the the and you in up plays gas I the kind That's you're hub’s of you some macro emerge mean to equation, a how that I see premium side to of the on more the lower right. of on All are

Michael Kennedy

the get We we could Btu Henry stream. a Hub in NYMEX see gas leave then have because we that out. pricing lot a Generally, play the and improvement of ethane

of $X.XX. It's $X.XX whatever kind kind price XX% is. that's the the to So generally of NYMEX to around premium

a it's that. $X.XX NYMEX, if of you'd differential expect $X type So, with to $X.XX

actually premium, last lot So get we to the of pricing a more that that's on why the it's of of year's summer, last off that sell a and on from the pipes but side premium to of areas. we Gulf pricing other it's lot come saw tended premium kind compared the because eastern

strong we'll really goes. does go to continue see the to pricing transport But summer. in it our So, hubs how the

we trend 'XX that in will 'XX. hopefully, occur So saw also in

Umang Choudhary

you. Thank Helpful.

Operator

proceed [Operator Instructions] of Company. next line question. comes Our the Deckelbaum question & your David Please from with Cowen

David Deckelbaum

the Mike, questions. to going Mike, remarks, from But... I Thanks, Haynesville guess, not soon. anytime your the prepared appreciate I you're be entering

Michael Kennedy

would That correct. probably be

David Deckelbaum

to wanted Fair ask the enough. maybe on of spend. your I know land XX% just I it's budget.

a carryover I leasing half there's year of activities more in more think with you intended previously we thought a Is you kind for into guys bit have is budget little you I know first quarter. last of opportunity calendar more that pursuing 'XX had success loaded the 'XX. had organic like that than that the there were or program? renewed view you from is

Michael Kennedy

Well, it's both.

that to going noted quarter, David. $XXX in and you think that incurred is be that amount is first -- disproportionate the there that a referenced, million, we I of carryover

found we're Marcellus area barriers more the high. more to having this in are of to entry I success, in we the and very addition But think that that,

to have have You the midstream.

It have hometown you the in the You that -- is and kind of having have are operator have West the more we liquids, processing success, team. we're transport. so out for and of choice what found the Virginia we to landowners more that is

really the where be next BTU it's Wetzel just in best core and wells success, and content. to find to liquids Tyler, to terrific continue have currently Counties, we're that continue the developing high we where Marcellus in So, acreage we right acreage

David Deckelbaum

for uptime of timing Cracker and assuming 'XX me in terms are in there implied in just, what the the your numbers? of about is Shell as The one terms that's in second you think you guidance,

Michael Kennedy

that. a of There's around bit little risking

think quite I the has fourth Shell -- it's versus improved quarter in quarter. the performance dramatically the first

not, So, if merit that we'll 'XX. see did or that risk we risking for pretty has healthily but

won't As around kind are that. economic commitments it of impact. a reminder, have volume an minimum There

material. performance. not to risk we it's ethane their continue standpoint, flow just cash a to from volumes to allow Shell from So, a volume, really the But did improve

David Deckelbaum

you, Thank guys.

Operator

to Ladies for the final our Kruger session. and concludes comments. question-and-answer back any gentlemen, floor turn Mr. I'll this

Brendan Krueger

Yes. Thank are further us you reach call. for you. if today's out Please any questions. Thank on joining there

Operator

concludes This conference. today's you. Thank

time. You may participation. your you Thank disconnect your lines at for this

Antero Resources (AR) 16 Feb 232022 Q4 Earnings call transcript